How parents can help kids ready for home ownership

If you are a parent here reading this then you are on the right path toward helping your child/children closer to reaching that goal of home ownership here in Australia.

Rising property prices have made people think that it is now harder and if not almost impossible for the younger generation to get into the property market as opposed to how it was for previous generations – but luckily there are solutions and ways for the younger generation to enter into the property market.

With Australian property prices now among some of the highest in the world, it’s not surprising that a large amount of young people believe that home ownership is out of their reach. But there’s no need for your children to feel this way as there are a number of options out there which could be easier and more achievable than you think. It will be best to talk your situation over with a broker who will be able to have a look over your situation and provide you with the advice needed to proceed forward. With a little assistance from you, there may just be an option which will allow them to purchase a place to call their own without yourself having to put up cash funds from your cash savings.

Find below some handy steps you as a parent can take to help your child/children:

Start early

If your kids are a young age, consider opening a high-interest savings account for them as soon as possible. Regular deposits based on a weekly, fortnightly or monthly basis can really add up without hurting your pocket and this can give your kids a head start with their property savings.

If you were to start a savings account by adding $50 per week (approximately $7.12 per day) every week for 15 years this could add up to an amount of over $40,000 depending on the amount of interest earnt in that time. By the time they were to look at buying a house this will be a nice boost to help them with that purchase.

Help with the deposit

For potential first home buyers out there, coming up with the sufficient deposit needed is one of the biggest obstacles they are faced with along with the struggles of day to day life. Ideally a deposit of at least 20% of the purchase price is what you want to aim for but there is the option of making the most of Lenders Mortgage Insurance (LMI), this charge is calculated based on the loan size and the overall LVR of the property, but is able to be capitalised onto the loan at settlement. Please read more about this in one of our other articles titled Lenders Mortgage Insurance.

Alternatively if you have enough cash funds available and you are willing to provide the deposit funds needed to them as a non-refundable gift this can help get them into their own home sooner before house prices rise any further.

Providing a guarantee

If you have sufficient equity in your own home, you may be able to act as a guarantor on your child’s home loan by using your own home as security. This can be helpful in cases where your child doesn’t have enough of a deposit for the loan and will eliminate the need for Lenders Mortgage Insurance. A guarantee will cover 20% of the purchase price as well as the government charges applicable at time of purchase. It is important to know that if your child is unable to make the repayments, you’ll be liable for the guarantee amount portion of the loan. It’s important that all interested parties clearly understand the risks involved. Please read more in one of our other articles titled How Guarantees Work.

Share your experience

It’s never too early to start teaching your kids good habits and sharing your tips and tricks to start saving. It is always good to teach them from a young age how to budget their pocket money as this will allow them to save for their goals and also teach them if they want certain things in life it is much more desirable if they have to earn it.


There is the option that first home buyers are able to explore which may be of assistance to them such as the First Home Owners Grant (FHOG).

If you would like a free review of your situation and would like to know information about a mortgage brokers services or would like a no obligation free review and whether a parental guarantee is a valid option for you, please don’t hesitate to get in touch with your mortgage broker Gerry today and we can talk further about should there be any questions/queries you may have.